One thing we both decided. We are not moving up in a house, just over. We don't want or need anything really expensive just because we "qualify", but there are things we want in the house that we don't have now.

Unless required by a job move, or a neighborhood that is quickly deteriorating, moving "over" makes no sense. It costs too much to repair the current house, pay a realtor, pay the taxes, and then to move, let alone closing costs on the NEW home.

However, I wanted to be open to my husband's idea and see them out. We do plan on buy another house eventually because this one was mine and now there are two of us and it's not "our" house and is small, we want a different neighborhood BUT, I want to wait until we're ready, no debt, and can afford what we want, not be forced.

This is all the more reason not to sell now. Keep the home you have. It won't be as easy, but you're maintaining your current equity and you're not going through the expense of a move.

I don't like interest-only mortgages (or option ARMS) but see their advantage for cash flow purposes. It's not preferred, but you do have to have somewhere to live, and otherwise you'd just be spending money on rent that buys you nothing anyway. If you could lock in at a decent rate for minimal closing costs, fine, but otherwise, since you're planning to move in a few years you might as well keep the loan you have.

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